Umm . Can I have a do-over, please?

See, I'd like to go back about three months and buy up a whole handful of Lexmark (NYSE:LXK) stock on that little blip below $40. Alas, I chose instead to write about the company and put myself in our blackout period. And what about once the blackout was lifted? Well . let's just say I got a little caught up in earnings season and just plum forgot about it.

That's proving to be some expensive selective amnesia, since the stock is now up about 25% following that freak-out low. What's more, while the company still has a long row to hoe to get back in the good graces of the growth crowd, investors in general seem to be quite happy with the above-expectations performance in this quarter, and the company's plans for restructuring.

As reported, sales dropped 12%, which was pretty evenly balanced between declines in the business segment and declines in the consumer segment. Nothing really new here -- competitors like Hewlett-Packard (NYSE:HPQ) have slash-and-burned on the pricing side, and the company also seems to be losing some share to the likes of Japanese competitors Canon (NYSE:CAJ) and Seiko-Epson.

And when you have a company with high operating leverage, revenue declines lead to disproportionate declines in profitability. To wit, gross margins fell almost 4 full points, operating margins fell more than 4 points, and operating income dropped 42% from the year-ago level.

In response to ongoing pressures, the company is launching another restructuring effort. 825 positions will be cut, and 525 more jobs will be transferred overseas to lower-cost countries. This means that more than 1,300 people are losing their jobs unless some of them want to work shoulder-to-shoulder in Mexico or the Philippines. In addition to closing a facility in Scotland and freezing the pension plan, the company estimates that this will save about $130 million in annual expenses ($80 million of which are cash expenses).

I still believe Lexmark has a very real chance to recover. It spends a fair bit of money on R&D (about 6% of sales), which compares favorably not only with HP, but with pseudo-comparables like Xerox (NYSE:XRX) and Logitech (NASDAQ:LOGI), as well. Yes, I know these aren't straight comparable companies, but you've got to work with the information you have.

That said, some of the easy turnaround money has been made already. That's not to say that Lexmark can't or won't eventually return to the highs of yore -- it just means that the risk/reward balance has tilted a bit more unfavorably from October's lows.

For more Foolish thoughts on Lexmark:

Fool contributor Stephen Simpson has no financial interest in any stocks mentioned (that means he's neither long nor short the shares).